AB Volvo

Ladies and gentlemen, a warm welcome to this conference covering the Q4 and full year 2022. My name is Claes Eliasson and today we will be listening to a presentation by the Volvo Group president and CEO Martin Landstedt, followed by our chief financial officer Tina Hultqvist. After the presentations, there will be a customary Q&A session, and I will urge you to limit your questions to two in order to make room for as many of you as possible. With that, Martin, I think it's time to get this show on wheels.

It's all yours. Thank you, Klaus. And good morning, everyone, also from my side, to this quarter four and full year 2022 reporting for the Volvo Group. Maybe to summarize a little bit before coming into the slides here, in the fourth quarter as well for the whole year, it is also the full year reporting and really taking that holistic view as well. I think that Volvo Group continue to deliver very strong outcome, both from operational perspective, customer perspective that is very important now when we have a very strong demand, and business perspective supported by solid financial results. What is important in this time, in this transformational time, is that we also really did see how we were picking up when it comes to paving the way for the transformation of our industry, not at least when it comes to battery electric vehicles. And I will show that later when it comes to the sales of, and not at least when it comes to the pickup of deliveries of battery electric machines in quarter four. But maybe again most significant, we are still living in unprecedented times with a lot of moving and uncertain parameters, obviously. And 2022 was absolutely not an exception, as you know. A continuous COVID situation, lockdowns, logistical challenges, not at least a Europe with a lot of operational challenges, both as regards supply chains, but also as regards to volatility and cost situation, energy being one of those. And I have to say, to start with, it is a pleasure to work with an organization and with partners that have been able to actually go through 2022 in this way. So coming in then a little bit to summarize this, what does it mean from a Gile perspective and take a stance on that? As I said, strong results in 2022. Sales growing with 101 billion SEK. Of course, FX included, but just taste that a little bit, 101 billion SIC in one year, up to 473 billions, an all-time high, obviously. But also our adjusted operating income growing with almost 10 billion to 50.5, so for the first time north of 50 billions, also that an all-time high. I'm also very pleased to see the strong cash flow generation since we are also continuing to invest for the future, both in CapEx, but also when it comes to actually working capital. And Tina will come back to that. And when I say invest in working capital, we have been forced to do that in order to create resilience, obviously. But that has also made us come into a situation where we have a net cash position of 74 billion. While we also continue to expand by the way the customer finance portfolio. A return on capital employed, the master of all metrics, remained strong and grew during the course of the year to 27.4%. And we managed to deliver these strong results, as I said, despite all the turmoil. So a strong overall year. When we then come into the quarter, it was again a very strong development when it comes to top line, more than 30 billion, up to 134 billion in top line. And that was 70% growth adjusted for FX. The adjusted operating income amounted to 12.2 billion and at the margin of 9.1%. We delivered also in this quarter a strong cash flow of almost 19 billion. And as we have also communicated, and we had that discussion already in the quarter three reporting and partly in previous quarters, our strategy to stay close to customers in this time when they really need the equipment, delivering as much as possible from the order backlog remains. This has resulted in a good EBIT growth and higher market shares that will serve us well also with the installed fleet for future service business and resilience. But it has also meant, and I want to be clear on that, that the marginal lost trucks or equipment, because we see the same pattern also in construction equipment, they have been expensive. they have been costly. But when we see the underlying quality of this business, the price realization, the value that we are providing, this is, as we deem it, the right balance. And of course, they have been more costly in Europe given, so to speak, the mitigation activities we have been doing together with our supply chain temporarily. This balance between performing here and now and to invest and lead the transformation, because it's true also we have continued to invest significantly to expand our ranges of electric products. Those investments in CAPEX and OPEX goes both for research and development that we often talk about, but also the ramp up as such. Because being early out, and I think you know a number of other examples in, for example, the pest car industry, where it takes some time to do it, and that we are really now on the ramp-up curve, will really benefit the group moving forward, both when it comes to really trim the industrial footprint, but secondly, really to make sure that the business models are as we expected, and thereby it's so important to continue to drive this. Volume development, very straightforward. I think it's fantastic, given all the moving parameters, that we have both a production and a delivery record on the truck side. Truck deliveries increased with 4%, and that was a quarter four record. Volvo Construction Equipment also plus 4%, so great job done by the whole value chain here. Of course, cross our internal value chains, but also together with our supply chain partners. It is unbelievably well done, I have to say. I've been some years in this industry, and when I've seen what has happened, it's just great. When we look at, as I was into electrification progress, we can also see that it's starting to take off now. The good news is that we see some of our major customers are really taking bigger orders. So we are moving from this pilot phase into really electrifying depot by depot and segment by segment that we have been talking about. So 5,000 orders. And the delivery is actually close to 2,200 electric vehicles and machines during the course of the year. And as you can see in the graph also, a very steep now increase in the quarter of deliveries. And as we see it, a very, very important part of the value creation moving forward. And we are proud of having that leading position. Also on the service sales development, strong. In quarter three, we said that for the first time moving 12, we were at over 100 billion SEC. Now we are moving 12, or for the full year, above 110 billion. As you can see, strong development in all segments with the exception of construction equipment where you see a flat development. So that is partly and quite a big proportion due to the fact that we had a rather significant service business in Russia. And the other part is that we have a little bit of flattening and softening, say flattening situation in Europe mainly. But generally speaking, as you can see, activity levels are strong on the service side. Then you can, of course, say that if you look at the relation between vehicles and services, even if we're growing fast here, we have not been growing as fast as we have done on the equipment side. As is natural, because that is a more long-term investment. Coming into trucks, a lot of things have happened. Obviously, also in quarter four, as I said, a lot of investments, but just to talk a little bit about that and summarizing also some key highlights for 2022. In October, already we passed the milestone of having produced 1,000 battery electric trucks in the medium-duty operations in Glenville. Very important for us, obviously, so they are really now coming more into a real type of serial production mode. A major customer for mainly northern Expo, former Norbert Dantresongle for everyone that has been around for a while, ordered also 100 trucks to their fleet. A very important sign because they are a major player, obviously, not only in France, but in surrounding countries. And most important is that there have been extensive testing done also in their operations. So that is a really good sign also that it's now scaling here. And in the quarter, the Volvo Group also signed, in addition to what we have done in Europe now with MyLens, that is the joint venture together with Trayton & Daimler on charging infrastructure in Europe, we signed a partnership that we are very proud of, and that is actually to really partner with a pilot company, and Flying J. So those are the two brands. And for everyone that has been traveling U.S. on highways, you know the importance of that when it comes to resting areas and to services for not at least commercial operations. So having that opportunity will be a great opportunity for really creating the right footprint when it comes to electrification. The last thing is more interesting from how we leverage also the group assets when it comes to modularity. We have been, for a long time, been out of the medium-duty offering in North America. It has been a constant dialogue, not at least on the MAC side, and we decided then, 2018-19, to get that going. A very fast project starting then in the mid-2020, and now... When we have been ramping up, I'm very proud to say that already for the full year 2022, we have a 5.3% market share, obviously very important for us, but also for the American footprint for the Mac network and with a big success. So there is also a showcase how we can continue to leverage the global cost system, as we call it. When it comes to forecast, undramatically positive, I should say, in these uncertain times that we are reiterating our forecast in all major markets, as we already stated in quarter three. And that means, obviously, that we are forecasting strong markets on good levels and solid levels in North America and Europe. And that can also lead to a stabilization and for our supply chains moving through the year here, even if short term it will still be a number of challenges to continue to work on. But really, really positive that we see this and I note that others have been out also. So I don't think we need to comment that anymore. When it looks for truck orders and deliveries, as you remember in quarter three, by the way, we had a book to build that was 1.2. So then it was, and now we have a book to build and that is... Hello, sorry.

Sir, can you hear me?